The Day the Endowment Effect Went Missing
(2019) KOGM20 20191Cognitive Science
- Abstract
- The endowment effect, that people tend to value goods higher if owning them than if not, conflicts central economic principles. A new theory explains this price disparity by uncertain sellers’ and buyers’ strategic reliance on opposite borders of a spectrum of possible utilities of a good. Through a review of concurrent theories, this paper highlights the superiority of the new uncertain utilities theory compared to the loss aversion, bad deal aversion, psychological ownership, and attribution sampling bias explanations of the endowment effect. Despite this, five pilot studies testing the uncertain utilities theory employing the increasing information paradigm fail not only at supporting the theory’s hypotheses but also at finding proper... (More)
- The endowment effect, that people tend to value goods higher if owning them than if not, conflicts central economic principles. A new theory explains this price disparity by uncertain sellers’ and buyers’ strategic reliance on opposite borders of a spectrum of possible utilities of a good. Through a review of concurrent theories, this paper highlights the superiority of the new uncertain utilities theory compared to the loss aversion, bad deal aversion, psychological ownership, and attribution sampling bias explanations of the endowment effect. Despite this, five pilot studies testing the uncertain utilities theory employing the increasing information paradigm fail not only at supporting the theory’s hypotheses but also at finding proper endowment effects altogether. Two successful replications of earlier endowment effect studies using the valuation and exchange paradigms hint to the final theory of the endowment effect: experimental artefacts. The seven studies include nine different goods (mugs, t-shirts, falafel wraps, art prints, chocolate bars, diseases/cures, movie tickets, bananas, and apples) and 422 unique participants. The results suggests that the endowment effect may to some extent be an experimental artefact. The discussion highlights the importance of context to endowment effect study participants and argues for endowment effect theories acknowledging humans as information seeking and processing individuals. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8995275
- author
- Wrisberg, Anton LU
- supervisor
- organization
- alternative title
- Dagen då ägande-effekten försvann
- course
- KOGM20 20191
- year
- 2019
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- endowment effect, cognition, seller buyer disparity, price, information, increased information paradigm, uncertain utilities
- language
- English
- id
- 8995275
- date added to LUP
- 2019-10-23 09:14:47
- date last changed
- 2021-09-22 09:40:39
@misc{8995275,
abstract = {{The endowment effect, that people tend to value goods higher if owning them than if not, conflicts central economic principles. A new theory explains this price disparity by uncertain sellers’ and buyers’ strategic reliance on opposite borders of a spectrum of possible utilities of a good. Through a review of concurrent theories, this paper highlights the superiority of the new uncertain utilities theory compared to the loss aversion, bad deal aversion, psychological ownership, and attribution sampling bias explanations of the endowment effect. Despite this, five pilot studies testing the uncertain utilities theory employing the increasing information paradigm fail not only at supporting the theory’s hypotheses but also at finding proper endowment effects altogether. Two successful replications of earlier endowment effect studies using the valuation and exchange paradigms hint to the final theory of the endowment effect: experimental artefacts. The seven studies include nine different goods (mugs, t-shirts, falafel wraps, art prints, chocolate bars, diseases/cures, movie tickets, bananas, and apples) and 422 unique participants. The results suggests that the endowment effect may to some extent be an experimental artefact. The discussion highlights the importance of context to endowment effect study participants and argues for endowment effect theories acknowledging humans as information seeking and processing individuals.}},
author = {{Wrisberg, Anton}},
language = {{eng}},
note = {{Student Paper}},
title = {{The Day the Endowment Effect Went Missing}},
year = {{2019}},
}